Drunken sailors would be ashamed

Via Hot Air:

Solyndra employees: Company suffered from mismanagement, heavy spending

Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up.

A new factory built with public money boasted a gleaming conference room with glass walls that, with the flip of a switch, turned a smoky gray to conceal the room’s occupants. Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic wrap, employees said.

As the $344 million factory went up just down the road from the company’s leased plant in Fremont, Calif., workers watched as pallets of unsold solar panels stacked up in storage. Many wondered: Was the factory needed?

“After we got the loan guarantee, they were just spending money left and right,” said former Solyndra engineer Lindsey Eastburn. “Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”

My ex-wife (#2) used to do construction loan disbursement for a major lender. These were commercial loans in the millions of dollars for things like condominium projects and shopping centers.

The first part of the loan process was a very detailed application that included blueprints, bid estimates from contractors and sub-contractors, and some explanation of how the borrower expected to be able to repay the money. The lender didn’t just take the borrower’s word for anything, they wanted independent analysis from experts.

Let’s say the proposal was for a condominium project. The application would include the itemized cost of everything, including buying the land, construction materials, labor, fees, permits, taxes, etc. The borrower would have to explain how much it was going to cost to build and then estimate how much they could get for the finished units.

Once the loan was approved it would end up in my ex’s department. Let’s say the construction loan was for $10 million and the land was already paid for. The first thing to be built would be the water and sewage lines.

Part of the money would be disbursed to start the work. She would cut the check directly to the subcontractor. As each phase was finished the lender would have inspectors go out to verify everything was completed properly. Then she would cut another check.

The lender did not just hand over $10 million without strings. If something went wrong halfway through the project the lender could stop disbursing funds. That way they were only out $5 million, not $10 million.

Here’s what’s bugging me: Exactly what was that $486 million supposed to pay for and how was it disbursed?

There should have been government bean counters crawling all over that company. How come they didn’t notice that Solyndra was burning through over $500 thousand a day?

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38 Responses to Drunken sailors would be ashamed

  1. Jeffhas says:

    … and they wonder why Joe Public gets pi**ed when they want to raise taxes on anyone.

    Let’s just give more money to the idiots that can’t manage the money we already gave them.

    … it’s almost like project like this were designed that way.

  2. DeniseVB says:

    I remember buying our first home felt like a public gyn exam in a prison. And this was for a 63k home with a full VA loan (no down payment) guarantee (with taxpayer money). Very few foreclosures back then because people had an option, if you can’t afford the home, rent. And the bank was the boss of you 😉

  3. yttik says:

    “Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic wrap, employees said.”

    That is true of so many government funded businesses, that if you ever need office equipment, don’t pay retail.

  4. WMCB says:

    There should have been government bean counters crawling all over that company. How come they didn’t notice that Solyndra was burning through nearly $1 million a day?

    The most obvious answer that I’m going with unless someone can prove differently:

    The only logical explanation so far for the govt’s behavior re: Solyndra is that there was never any real expectation of either profit or a continuing product. Oversight only happens when the motive of recouping investment exists. If no one expected any recoupment, if the entire deal was done as both a favor and a photo-op, then where’s the motive to oversee? It doesn’t matter, unless you did the deal with some expectation of being paid back and actually investing in a viable business. If you never expected that to begin with, then it’s perfectly understandable that the govt didn’t give a shit how the money was spent. I mean, why? The loan served its purpose as funding for a political tool. Once that was accomplished, there was no need and no logical reason to follow the money. That’s not what the money was for.

    “Look at what they do, not what they say.” I live by that adage. Their own actions tell you what the intent of that “loan” was. They behaved as if it was spent money that had already accomplished its purpose, not as if it were loaned money yet to bear fruit. Ergo, the expectation for fruit was never part of their motivation from the beginning.

    • myiq2xu says:

      I checked my math and re-edited that last sentence:

      How come they didn’t notice that Solyndra was burning through over $500 thousand a day?

      • WMCB says:

        Oh, well. It’s all good now, then. I denounce myself.


      • yttik says:

        “How come they didn’t notice that Solyndra was burning through over $500 thousand a day?”

        Because all their bean counters were preoccupied with auditing me so they could catch that 36.50 I didn’t pay them last year.

        • myiq2xu says:

          So the deficit is your fault.

        • WMCB says:

          And the bean counters to find that 36.50 cost the govt more in an hour than the 36.50 you owe.

          The cost of tax compliance, both to the govt and to businesses, is HUGE in this country. I’d cheer anyone, R or D, who wanted to scrap and simplify the entire tax code. The savings from not having to have armies of accountants and lawyers, and thousands of IRS agents alone would be ginormous.

          The problem is that if you simplify the tax code, scrap all the loopholes, etc, then you take away the power of politicians to use the tax code to punish/reward select businesses and cronies. So neither party will be serious about doing it. And the big multinationals would hate it, because they know that it’s all written to favor them, and to squash any small startups who might threaten their monopolies.

        • Owen says:

          Tell me about it. I got some inheritance from my parents (well under the ‘death tax’ limit, like 80 thousand.) I had it in stocks ‘cuz that what *rich people* do. Then the market went belly up and I lost over 15 thousand dollars. I felt that 1 it was inheritance, 2 it lost a boatload so I didn’t report it. Therefore I was audited. 6 months to decide that since I lost more that what they said I owed I didn’t owe them any money on my inheritance……

          But yet they gave free money to how many freeloadiong bastards??

    • WMCB says:

      It’s really not much different from the pay-to-play public housing scams that were ubiquitous in Chicago.

      It’s common practice there to announce some grand housing project (because who could be against housing for the poor, you cruel wingnut), and line up all the contracts for your buddies.

      Everyone takes their cut, the project never really gets done (or is done in a shoddy manner), and a few years later the next project is announced (and you can’t oppose it because then you’d be opposed to housing for the poor, you heartless cretin.)

      Wash, rinse, repeat. It’s been going on for decades.

      • yttik says:

        Absolutely, WMCB. We have some low income housing here, by the time it’s all paid for, it will have cost us almost 100,000 per apartment. We could have bought everybody that’s going to rent those apartments a new house and still saved money.

  5. ralphb says:

    Back in the go-go days before the Internet boom went bust, I wound up in a proof of concept project for system/network management software in Silicon Valley. It was one of the biggie startups and had a really big new investment from a phone company in it.

    Their computer rooms at their new location was full of servers and humming along. I happened to notice in the back parking lot 2 semi trailers full of new Sun servers waiting to be unloaded while a 3rd was being unloaded and pallets of servers were being stacked in what looked like a warehouse area. I knew from our project that their current infrastructure wasn’t half utilized and a hose job was coming.

    At dinner that night with our sales guys, I told them what I had observed and we should get a hefty payment upfront because this enterprise wasn’t long for the world. We got our upfront money and within 8 months the startup bit the dust when their angel phone company pulled the plug.

    Irrational exuberance, like karma, can be a real beyotch when deep pockets meet idiots.

    • myiq2xu says:

      In a July 13 letter to the House Energy and Commerce Committee, then probing his company’s loan, Harrison insisted that the company’s future was bright.

      “Solyndra’s revenues grew from $6 million in 2008 to $100 million in 2009 to $140 million in 2010,” Harrison wrote. “For 2011, revenues are projected to nearly double again.”

      I’m gonna go out on a limb and say those were gross sales.

      • ralphb says:

        No doubt and it would pay to be suspicious of those numbers. There’s a lot of room for deception in revenues.

  6. myiq2xu says:

    Republicans Decrying ‘Job Killing’ Green Energy Agenda Have Sought Green Jobs For Their Own Districts

    If the government is going to spend the money why shouldn’t their constituents get a slice of the pie?

    • ralphb says:

      Seems like normal behavior for congress critters to me. I’d like to see some green job money spent in my neighborhood.

    • WMCB says:

      It’s the same reasoning that says “why don’t all the liberal taxpayers so in favor of higher taxes just start paying them voluntarily”, or “why don’t business owners who are in favor of all subsidies ending refrain from taking them?”

      The answer is that the business owners and taxpayers put themselves at a grave disadvantage if others are getting the breaks that they refuse. Being in favor of ending a practice for everyone (including yourself) does not make it hypocrisy if you take advantage of what’s there so long as it is, and others are doing the same. It’s a little more complicated than that. Some things only work if it’s an across the board reform. Trying to refuse individually accomplishes nothing other than shooting yourself in the foot and strengthening those who ARE taking the money.

      • ralphb says:

        But I still want Warren Buffet to see that Berkshire Hathaway pays the $1 billion or so in back taxes it owes to the IRS.

        Since he keeps saying, over and over, he wants to be taxed more, it’s really not unreasonable to let him know he can donate to the IRS or to pay down the deficit. I consider that a special case.

        • DeniseVB says:

          My congressman has 15% of his federal pay go to paying down the debt. There’s several in Congress who do that. (What, it’s not in the media !?)

          Perhaps they can start with millionaire congresspeeps to set an example 15% extra of your pay to the debt or a charity of your choice. Let them put their money where their mouths are (wink, wink).

          Of course, I’m also in favor of Hollywood celebrities raising money and bringing awareness for worthier causes than politicians. (Can you hear me now Oprah !)

        • WMCB says:

          The hilarious thing, to me, about the “Buffet Tax” that he is lauding and allowing Obama to attach his name to, is that is very likely will not touch Buffet himself.

          See, a large chunk of Buffet’s income is from tax-free municipal bonds, which this law won’t touch. The Great Oracle is running around touting a solution to his “shameful under-taxation” that will probably not result in he HIMSELF paying any more at all. A lot of his competitors, whose income is actually used for their businesses rather than being safely sheltered, will get creamed, though.

          They are weasly fuckers.

        • Three Wickets says:

          Here’s Harvey Golub, formerly of AmEx now AEI, complaining about the impact of tax-free muni bonds going away for high income people with this jobs bill. Then he pulls a strawman and says let’s take away the tax-free benefit for muni debt from everyone, not only the rich, and look for far more comprehensive reforms in the tax code. This closing of “loopholes” thing has everyone hot and bothered. Difficult to trust most of the people complaining, especially if those who make money from playing with money and credit…financial sector types. I think Buffett probably has some good intentions, but I don’t really trust him either.

  7. ralphb says:

    Suck it, bond vigilantes!

    Global Meltdown: Investors Are Dumping Nearly Everything

    With no solution in sight for Europe and new fears of a global recession, investors dumped stocks and commodities and ran to the safety of U.S. Treasurys.

    Treasury yields [cnbc explains] , as a result, slipped to historic lows with the 10-year yielding 1.75 percent and the 30-year at 2.86 percent.

    The worst performing stock market sectors mirrored the sell-off in global commodities markets, with materials down 4.6 percent and energy stocks down 4.1 percent.
    “People are finding it really isn’t gold. It isn’t precious metals. It’s not currencies. U.S. Treasurys are where people are flocking to at a time of extreme concern about risk, and we continue to see Treasurys continue to get bid up,” said Zane Brown, fixed income strategist at Lord Abbett.

  8. votermom says:

    Wishful thinking here, imo

    Appearing tough in the investigation would serve to distance Democrats from their titular head. If there is a smoking gun, Democrats will pursue it. If they see an opportunity to take out the king, they may go for it. If there is a “smoking gun,” this will end more like a Richard Nixon than a Bill Clinton.

    Just as Democrats don’t want a pariah at the top of the ticket, many in the media do not want to continue plugging what is obviously a failed candidate. The protective shield that existed is being dismantled. The press is more interested in saving what credibility they have left, rather than justifying an increasingly indefensible and broken presidency.
    Investigative reporting, so obviously missing when Obama was The Next Coming, is likely to be cranked up. The media will fully cover any official investigations. Furthermore, entrepreneurs within their ranks and within the internet community are likely to focus on filling in the blanks in Obama’s missing past.

    • Mimi says:

      I saw that this morning and clicked the link. It looks like the cheap fake crap jewelry they put on 18 year old beauty queens. Is Katie making Michelle a My Little Pony crown?

    • votermom says:

      The pic shows her wearing 3 of those at the same time, each one worth $15K.
      Nouveau riche syndrome.

      edit: I lie, here are the exact $ amounts:

      The First Lady wore Katie’s Lotus cuff priced at $15,000 with 2.9 carats of diamonds, her Gothic cuff at $15,350 with 2.17 carats in diamonds and the Quatrefoil bracelet at $11,800 with 1.73 carats in diamonds.

  9. Three Wickets says:

    Market is so nervous, it’s even getting out of gold and buying Hormel which makes Spam.

  10. ralphb says:

    CERN claims faster-than-light particle measured

    I don’t believe this will hold up in the end. There are a boatload of things to be done yet for independent confirmation, but if it’s true, could change everything.

    GENEVA (AP) — A fundamental pillar of physics – that nothing can go faster than the speed of light – appears to be smashed by an oddball subatomic particle that has apparently made a giant end run around Albert Einstein’s theories.

    Scientists at the world’s largest physics lab said Thursday they have clocked neutrinos traveling faster than light.


  11. WMCB says:

    Denninger’s take today:

    So How Much “Capital” Really Exists?

    We’re about to find out, I suspect.

    There was a wire blurb from FT that claimed the ECB said they’re going to “rapidly” recapitalize banks in Europe.

    Wait a second – we were told, just days ago, that the European Banks were ok and didn’t need capital!

    So again investors were lied to. Again.

    How many people have gone to jail for this? None.

    You want to know where panic comes from in the markets? It comes from this sort of crap, where one day we’re told everyone has plenty of capital, where we’re told that Bank of America and Morgan Stanley are “fine” along with all the banks in Europe and then we get an announcement that basically says oops, we lied, we’ll recapitalize the banks.

    You can’t have this both ways.

    Either there is enough capital or there is not.

    Either the banks are financially sound or they are not.

    Since the balance sheets they present all say they are, either they’re lying or they’re not.

    So which is it folks? This is a confidence problem and it’s self-inflicted. As I have repeatedly noted you cannot trust a balance sheet any longer in any financial, and this has been true since 2007 when this crap started with WaMu.

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